RWIND not in the sails of unsuccessful ferry operator as it loses a £12m damages claim

Background

On 27 September 2011, the Scottish Ministers, acting through Transport Scotland (“TSRegulations”), advertised a contract for the provision of ferry services to the Northern Isles. The procurement exercise was to be conducted under the competitive dialogue procedure and was governed by The Public Contracts (Scotland) Regulations 2006 (the “”).

The tender documents provided that bids had to include at least one passenger service per day between Aberdeen and Lerwick (both ways), and that this service had to be able to accommodate freight as well. The tender documents further provided that bidders were required to provide details of any additional freight services that would be required to meet “current and anticipated demand”; crucially, the documents did not contain any further information as to these additional services.

In addition to the passenger service required, Shetland’s final bid to TS provided for a dedicated service for freight daily.

On 4 May 2012, TS informed Shetland that its bid had been unsuccessful, and that the contract had been awarded to another bidder, Serco. Serco’s bid provided for a dedicated freight service only once every two days, and only during the off-peak season.

Shetland brought an action before the Court to challenge the award of the contract to Serco, forming two principal arguments in substance.

Lack of Clarity in ITT

Shetland argued that TS:

• had failed to state the requirements of the contract sufficiently precisely, and more specifically had not defined “current and anticipated demand”, and whether it were to include a dedicated freight service; and
• had failed to define what was to be considered as “time sensitive freight”, and had failed to make clear that only refrigerated freight was to be included in that category.

Shetland contended that by failing to properly define the subject matter of the contract, TS had breached the Regulations (including the principles of non-discrimination, equal treatment and transparency) and prevented effective competition. The pursuers further claimed that, had it received the above information when preparing its bid, it would have been able to submit a more competitive bid and would have been awarded the contract.

The Court referred to the well-established principle that tender documents should be drafted sufficiently clearly as to allow all RWIND tenderers to understand them in the same way, as defined in Case C-19/00 - SIAC Construction Ltd v County Council of the County of Mayo. The Court further referred to the leading UK authority on the topic – Healthcare at Home Limited v Common Services Agency [2014] SC (UKSC) 247. In Lord Doherty’s view that same objective approach had to be taken; it was for the Court to determine whether the ITT had lacked clarity, in light of the RWIND test and not in light of the pursuers’ own interpretation. He concluded TS had included enough detail in its tender documents to allow all RWIND tenderers to interpret them in the same way, in particular:

• no RWIND tenderer would understandably and plausibly have construed the requirement to include capacity to service a dedicated freight service; and
• all RWIND tenderers, as experienced ferry operators, would have been able to understand the meaning of “time sensitive freight” in the context of the services to be provided, and could have further pinpointed that requirement through dialogue with customers.

Subjective evaluation of tenders

Shetland’s second main argument was that the evaluation of the tenders had been carried out by TS without reference to any objective criteria, and had been subjective and arbitrary. Shetland further contended that TS should have determined the levels of current and anticipated demand and benchmark each bid against these estimates.

The Court concluded TS did not have an obligation to carry out any such benchmarking exercise, as it would not have provided it with a definitive answer but rather a range of possible conclusions. The evaluation process had not been subjective and arbitrary as the individuals in charge of evaluating tenders had gathered a large amount of information through prior consultation and from bidding materials, which enabled them to make an informed decision.

Comment

This judgment provides some useful guidance as to how clear authorities need to be when framing tender documentation and the expectations of RWIND tenderers.

Full text of the decision